the Munitions Board list of strategic and critical materials dated January 194 together with any minerals or metals that subsequently may be added theret and shall include chemical grade chromite and all types and grades of mica pro cured by the Metals Reserve Company and its agent, the Colonial Mica Corpor tion. Except as otherwise provided, development and conservation paymen shall be made at such rates within the limitations defined in this Act so as t encourage production, development, and conservation and make adequate allow ance for depreciation, depletion, and amortization and shall include a reasonab profit to the producer based upon the values of all recoverable minerals an metals contained in the ore. Exploration premiums shall be made hereunder on to producers of newly mined ores and such premiums shall be made to small a marginal producers in addition to development and conservation payments an without regard to such payment limitations defined in this Act. Exploratio premiums also may be made to producers not requiring development conservati payments, where desirable, and in the futherance of section 2 of this Act. shall be a condition of the making of all such payments that recipients there shall pay no royalties on such portion of the amount received by the produc as is in excess of market prices, except where landowners share in the expens of transportation, milling, and smelting of ores.

SEC. 6. Development and conservation payments for any particular metals minerals contained in newly produced domestic ores and concentrates shall be i addition to the amount received per unit by the producer of such materials, a all domestic producers shall be eligible to receive such payments as may be re quired to effectuate the purpose and provisions of this Act: Provided, That (1 for copper and zinc, any producer mining and producing the equivalent of eigh hundred tons or less of recoverable metal per year from a particular mine of property shall receive development and conservation payments which, when adde to the amount received per unit, shall equal the sum of the market price of th metal plus maximum premiums available to producers during the fiscal year 1947 increased in proportion to the increase in the Bureau of Labor Statistics whole sale price index of all commodities since July 1946; (2) for lead, any producer mining and producing the equivalent of eight hundred tons or less of recoverabie metal per year from a particular mine or property shall receive development and conservation payments which, when added to the amount received per unit, shal equal the total sum herein provided for zinc plus 10 per centum; (3) for manganese ores, containing 40 per centum manganese and the maximum chemical cour position specified on page 1 of the Munitions Board specifications for metallurgical grade manganese ore, dated September 1, 1947, and for chrome ores containing per centum chromic oxide and otherwise conforming to the maximum chemical composition of the "low-grade A" specifications of the Metals Reserve Company, dated February 20, 1942, any producer mining and producing the equivalent of six thousand long tons (two thousand two hundred and forty pounds) or less per year of such materials from a particular mine or property shall receive for each unit of manganese or chromic oxide contained therein, the full base price per long-ton unit (twenty-two and four-tenths pounds) of contained manganese of chromic oxide, increased by 40 per centum, plus freight allowances as was offered and published in the Metals Reserve Company information circulars concerning the purchase of domestic manganese and chrome ores and concentrates, dateu May 15, 1943 (revised), except that ores containing less than 35 per centum manganese or chromic oxide need not be accepted, with increases or decrease per unit of total contained manganese and chromic oxide, fractions prorated in all cases, of (i) 3 cents for each 1 per centum of manganese or chromic oxide content in excess of or less than 40 per centum; (ii) 4 cents for each tenth increase or decrease in the chrome to iron ratio up to a maximum of 4 to 1 or down to a minimum of 1.5 to 1, and one-half cent for each tenth increase in the chrome to iron ratio above 4 to 1; (iii) 6 cents for each 1 per centum change in the combined alumina and silica content of manganese materials and 2 cents for each 1 per centum change in the silica content of chrome materials; (iv) 2 cents for each 1 per centum change in the iron content of manganese materials: (v) 5 cents for each tenth of 1 per centum change in the phosphorous content of manganese materials; (vi) 2 cents for each tenth of 1 per centum change in the combined copper, lead, and zine content of manganese materials, except that manganese materials containing more than 1 per centum combined copper, lead, and zinc need not be accented; and (vii) such other customary premiums and penalties for differences in chemical composition as may be sufficient to encourage the utilization and efficient concentration or processing of low-grade domestic manganese

and chromite ores to high-grade materials; (4) for other ores of strategic or critical metals and minerals, any producer mining and producing such materials from a particular mine or property, not exceeding in value the total amount obtainable by small producers of manganese and chromite under the quantity limitations for a particular mine or property as provided in this subsection, shall receive incentive development and conservation payments, which, when added to the amount received per customary unit, shall equal the highest sum per unit of domestic production paid for such materials by the Metals Reserve Company and its agents and by other Government departments and agencies during 1942-1946, inclusive, increased in proportion to the increase in the Bureau of Labor Statistics wholesale price index of all commodities since such hghest sums were first onered and paid, and the specifications for chemical composition of all such materials shall not be less liberal than the most favorable specifications acceptable to Metals Reserve Company and other Government agencies during suca period; (5) any producer mining and producing ores of strategic and critical metals and minerals from a particular mine or property in quantities exceeding the smallproducer annual quantity limitation shall, on individual application and to the extent requred, be eligible to receive such development and conservation payments or prices at such rates as provided in section 5 of this Act but not to exceed the maximum development and conservation payments or prices provided in this subsection for small producers, except that producers not mining or producing at a rate in excess of the small producer annual quantity limitations during the first quarter of 1948, and, regardless of the amount of future production, shall, receive the maximum payments or prices on all annual production within such quantity limitations without penalties or deductions against development and conservation payments or prices that otherwise would be required for production in excess of the small-producer annual quantity limitations; (6) the physical specifications and the terms of shipment and delivery, sampling and analysis, weights, freight allowances, and payments shall be not less favorable than the most favorable physical specifications and terms specified by Metals Reserve Company and its agents and by other Government departments and agencies during the period 1942 to 1946, inclusive, except that buik ores, not including mica, beryl, tin, tantalum, columbite, and mercury, in less than minimum carload lots need not be accepted. These maximum payment or price limitations shall apply unless in the opinion of the Director of the Office of National Mineral Resources, Production and Conservation special consideration is necessary for the further stimulation of development or production of a particular metal or mineral. All maximum development and conservation payment or price limitations provided in this section hereafter shall be adjusted in proportion to each five point change in the Bureau of Labor Wholesale Commodity Price Index.

SEC. 7. Except as otherwise provided in section 6 for small producers, all premium assignments to copper, lead, and zinc mines in effect June 30, 1947, under the premium price plan for copper, lead, and zinc shall automatically be reinstated in full on the enactment of this Act and such premium assignments shall remain in effect until individual adjustments are made under the terms and provisions of this Act, except that all adjustments requiring increased premiums shall be made retroactive to the date of enactment of this Act.

SEC. 8. The Director of the Office of Minerals Resources is hereby authorized and directed to (1) investigate the possibilities of obtaining production from low-grade and marginal ore deposits of the United States which contain the strategic and critical minerals and metals specified in section 5 of this Act; (2) conduct or arrange for such studies, testing, and metallurgical research as may be desirable or necessary to obtain reasonably accurate technologic and economic determinations and conclusions; and (3) submit recommendations to the Reconstruction Finance Corporation for the furnishing of funds required for the performance of such work and for the negotiation of contracts provided in this section. Where it is determined that mining methods and metallurgical or other processes are available and will enable the most advantageous development, production, and conservation of strategic and critical minerals and metals from low-grade and marginal ore deposits at costs not more than 20 per centum in excess of the maximum development and conservation payments defined in section 6 of this Act, adjusted in proportion to changes in the Bureau of Labor Statistics Price Index for all commodities, the Director shall recommend to the Reconstruction Finance Corporation that suitable contracts be made available to responsible individuals or companies for the development and exploitation of such deposits, and for other purposes, where such recommendations would be

practicable and consistent with the purpose and provisions of this Act. Reconstruction Finance Corporation is hereby authorized and directed to accept and effectuate the recommendations of the Director unless such recommendations are found to be impracticable or inconsistent with the purpose and provisions of this Act. Contracts may be made for the exploration, development, production, and conservation of domestic minerals, metals, and ores as defined in this Act, investigations, testing, and metallurgical research and for other purposes consistent with the purpose and provisions of this Act; and, where practicable, contracts for the exploitation of deposits shall be made to responsible individuals and companies desiring eventually to develop and establish a continuing enterprise on a competitive basis through technological improvements or other means. Funds may be advanced against future production under contracts at the discre 'tion of the Reconstruction Finance Corporation. Notwithstanding provisions of section 12 (b) of this Act, contracts may be made for a period not to exceed fifteen years from the enactment of this Act.

SEC. 9. (a) All additional production of metals, minerals, and ores, or the equivalent thereof (where the identity of origin is lost in blending, processing. or smelting) from domestic production, resulting from the stimulation of develop ment and conservation payments or expenditures under contracts provided by this Act shall be purchased by the Reconstruction Finance Corporation and shall be transferred to the national stock pile established pursuant to Public Law 520 (Seventy-ninth Congress, ch. 590, second session).

(b) The Bureau of Federal Supply of the Treasury Department shall reimburse the Reconstruction Finance Corporation to the extent of the current market price, free on board point of rail shipment nearest mines, processing plants or purchase depots, or free on board smelters, refineries, or markets (for copper, lead, and zinc), for all metals, minerals, and ores placed in the national stock piles under this section and such credits may be expended for purchases, development, and conservation payments, and exploration premiums over and above the limitations imposed in section 11 (a) hereof.

SEC. 10. (a) A producer shall at all times have access to the complete file on his mine(s) in the Office of Minerals Resources, which shall include copies of all calculations and analyses and all other information or determinations used as a basis for each individual assignment, revision, or denial of development and conservation payments or prices and exploration premiums.

(b) Copies of all rules, regulations, and policies and changes therein shall be furnished to each producer registered with the Office of Minerals Resources.

(c) The Office of Minerals Resources shall submit to the Congress, not later than six months after the enactment of this Act, and every year thereafter, a written nonconfidential report detailing the activities with respect to production, development, conservation, and exploration, and such other pertinent information of the administration of this Act as will enable the Congress to evaluate its administration and the need for amendments and related legislation.

SEC. 11. (a) All disbursements, as authorized by this Act, shall be made by the Reconstruction Finance Corporation, and shall include purchases or payments for minerals, metals, and ores and direct expenses incidental thereto, expenditures for exploration premiums, testing, metallurgical research, and investigations and shall not exceed $100,000,000 in the fiscal year 1949, and thereafter, such sums as the Congress, from time to time, may deem necessary to carry out the purpose and provisions of this Act.

(b) The provisions of paragraph (a) of this section shall expire June 30, 1955. (c) There are hereby authorized to be appropriated sums sufficient to carry out the administration of this Act.

SEC. 12. As used in this Act

(a) "Ores" and "newly produced ores" shall include ores, concentrates, sinters, mattes, nodules, briquettes, metals, minerals, and acceptable products recovered from mine, mill, smelter, and industrial wastes, but not including scrap metals, produced subsequent to the enactment of this Act.

(b) "Newly mined ores" means ores removed from mine workings subsequent to the enactment of this Act.

(c) “Conservation" means "conserving resources through the prevention of waste in the mining, quarrying, metallurgical, and other mineral industries," as used in the organic law stipulating the functioning of the Bureau of Mines.

[SUBCOMMITTEE NOTE.-This bill (H. R. 6456) is similar to H. R. 6390, introduced April 29, 1948, by Mr. Jensen, of Iowa, and to H. R. 6403, introduced April 30, 1948, by Mr. Crawford, of Michigan.]

EXHIBIT 57

REPORT OF THE INTERIOR DEPARTMENT ON H. R. 6623

Ion. RICHARD J. WELCH,

UNITED STATES DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington 25, D. C., May 26, 1948.

Chairman, Committee on Public Lands,

House of Representatives.

MY DEAR MR. WELCH: This is in response to your recent request by telephone for n immediate report on H. R. 6623, a bill to stimulate the production and conervation of strategic and critical ores, metals, and minerals, and for the establishnent within the Department of the Interior of a Miner Incentive Payments Division, and for other purposes.

This Department cannot support H. R. 6623 in its present form, not because this Department does not advocate the expressed purposes of the bill, but because he bill is not properly devised to accomplish those purposes, Stimulation of he production of strategic and critical metals and minerals for national defense and domestic economy is obviously desirable, but it is not a simple matter. This Department now has under consideration a draft of a bill for the purposes exressed in H. R. 6623, which is designed to overcome the objections here expressed o that bill.

The intention of H. R. 6623 is to provide for incentive payments to producers of strategic and critical metals and minerals, in addition to the money received by them from sales. The idea is that the mere increase in the money returns to producers will result in bringing about the desired increase in production. Assuming that the bill makes adequate provisions for such payments, this Departnent does not believe that such payments would accomplish the purpose. The present economic conditions and prevailing high prices for the metals and ninerals in question do not indicate that a mere general increase in the money returns to domestic producers would result in a significant increase in production. To be effective, any such incentive payments should be tied to and limited to the actual increase in production.

The bill does not indicate whether the incentive payments are to be made with reference to the production from particular mines or properties or with reference to the total production from all mines and properties of a particular producer. It seems plain to this Department that not only should such incentive payments be tied to and limited to actual increase in production, but that such payments should be made with reference to the total production of a producer rather than with reference to individual mines or properties of a producer. Unless such payments refer to the total production of the producer the tendency would be to divert facilities and labor from low-cost production to marginal and high-cost production in order to get the fullest benefit from incentive payments while they were obtainable. This might bring into production some marginal and highcost properties, but would be just as likely to decrease the total national production as to increase it.

*

*

Lack of definitions in the bill makes it impossible to ascertain just how it is intended to operate. The bill provides that the incentive payments "* * shall be made hereunder for all ores, metals, and minerals determined to be strategic or critical under the Stock Piling Act (60 Stat. 596). No specification whatever is made with respect to eligibility for such payments. For all that is contained in the bill the payments might be claimed by a mere broker or dealer in the metals or minerals in question.

The bill provides for two types of incentive payments. Payments for production are termed "development and conservation payments." The bill purports to make provision for another type of payment termed "exploration payments." The sole provision for these "exploration payments" is the following: "Exploration payments shall be made in addition to development and conservation payments without regard to payment limitations provided in this act, and not in excess of a total maximum to be determined by the Director." No definition of "exploration" nor any sort of guide is provided as to what is intended to be accomplished by these "exploration payments," as to whom the payments are to be made, or as to the amounts in which they should be made or their relation to the "development and conservation payments."

76100-48-pts. 4 and 5- -32

This Department believes that any program for incentive payments to producers of stategic and critical metals and minerals can be justified us present conditions only for purposes of national defense and for building up national stock pile under the Stock Piling Act (60 Stat. 596). H. R. 6623 is sufficiently coordinated with this proper purpose either in language or inte The bill recites (sec. 6 (b)): “All additional ores, metals, and minerals or equivalent thereof resulting from incentive payments shall be purchased by Reconstruction Finance Corporation." for transfer to the national stock p But the bill does not define what is meant by "additional ores, metals, a minerals" nor does it lay down any standard for determining which ores, met: and minerals are to be considered as resulting from incentive payments. M over, as previously pointed out, the bill does not provide that incentive payme are to be tied to or limited to increased production. It would be impossible determine by any means afforded by the bill what metals or minerals are to available for the national stock pile.

To be sure, the bill does provide (sec. 3 (c)) that the Director shall "preser rules and regulations for carrying out the provisions of this Act in the simpl manner." The bill does not, however, provide a sufficiently clear and unamb ous course of action within which the Director is required to function and wh the rules and regulations would be intended to implement. In order to adminis the bill as now framed, the rules and regulations would have to supply the adequacies and clarify the ambiguities in the bill. shall

The bill provides (sec. 5 (a)) that the incentive payments "* clude a reasonable profit to the producer * *." The term "reasonable prof is not defined. This Department believes that profit is not a suitable measu for incentive payments in the mining industry to increase production. Wh may be a "reasonable profit" in such a speculative and uncertain business mining particularly with reference to bringing in new or marginal prod tion-would be a highly controversial subject. It may be doubted, moreover, changes in the Bureau of Labor Statistics wholesale price index of all commo ities is a suitable standard for escalation of incentive payments under the a The prices of the very metals and minerals in question are an important eleme of the index, with the apparent result that one increase in the price of the metals and minerals calls for another increase, ad infinitum.

Finally, estimates based upon mineral production during World War II not indicate that any such over-all subsidy to producers as is provided in th bill will sufficiently stimulate domestic production of the strategic and critic metals and minerals that are most needed for the national stock pile. The Bureau of the Budget has advised me that there is no objection to the su mission of this report to your committee.

Sincerely yours,

J. A. KRUG,

Secretary of the Interior.

EXHIBIT 58

Hon. JOSEPH W. MARTIN,

UNITED STATES DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington 25, D. C., June 4, 1948.

Speaker of the House of Representatives. My DEAR MR. SPEAKER: A draft of a proposed bill to stimulate exploration for strategic and critical metals and minerals is submitted herewith. This bill provides for incentive payments for exploration with respect to strategic and critical metals and minerals, as contrasted with other bills now pending in Congress which attempt to provide for such payments for both production and exploration.

I recommend that favorable consideration be given to the enactment of legislation adopting the provisions suggested in this draft.

After consultation with other interested agencies and departments of the Government, this Department has come to the conclusion that the existing Stock Piling Act (60 Stat. 596, 50 U. S. C., sec 98 et seq.) contains the necessary authority for the stimulation of production if the necessary money is appropriated and made available for that purpose. The long-range program of exploration for